Recoverable service charges: financing and depreciation costs prohibited in recovery

Imagine: you are a tenant of a flat in Douarnenez, near the port. Your landlord installs a new communal boiler. Then each month, in addition to the rent and service charges, he bills you for a line item called 'depreciation of the installation'. Is this legal? No, answers the Court of Cassation in a judgment of 9 March 2005. This decision, often overlooked, protects tenants against abusive practices, but it can also trap a good-faith landlord in Pont-l'Abbé. So, what exactly does the law say? And how to avoid a dispute? I will explain everything.

The facts: a story like any other day

In this case, the Société d'habitations à loyer modéré de Lille et environs (SLE) is the owner of a housing estate. To change the heating and hot water system, it enters into a contract with the Compagnie générale de chauffe (CGC). The idea is simple: tenants do not pay the SLE directly, but sign an individual contract with the CGC for the supply of heat. The bill includes not only consumption, but also the repayment of the cost of installing the equipment (boilers, pipes, etc.) and financing costs.

Tenants contest this billing. They bring the matter before the court, then the Douai Court of Appeal, which rules in their favour on 6 March 2003. The SLE and the CGC appeal to the Court of Cassation. But the High Court upholds the judgment: this arrangement is a 'circumvention of a mandatory legal provision'. In short, landlords cannot pass on to tenants the cost of investments in communal equipment, even through an external service provider.

undefined, I have come across cases where landlords in Quimper tried to recover the cost of a heat pump via a maintenance contract. Result: years of proceedings and thousands of euros to repay.

The reasoning of the court — explained

The Court of Cassation relies on the decree of 26 August 1987 (as amended) which sets out a limited list of recoverable service charges. This list does not mention either financing costs or depreciation costs of heating and hot water installations. However, any charge not listed is prohibited. This is a mandatory rule: it cannot be derogated from by contract.

The trap was as follows: the landlord had the tenants sign a direct contract with the heating company. But the Court looked at the economic reality: the installation cost was in fact borne by the tenants. The legal form does not matter. As it says, this is an 'arrangement' that circumvents the law. The judges therefore recharacterised the sums paid as prohibited recoverable charges and ordered their repayment.

What few people know: this decision does not only concern heating. It applies to all communal installations (lift, aerial, etc.) if they are financed by the landlord. In other words, a landlord who installs a lift cannot pass on the cost to the rents. Only maintenance and operating costs are recoverable.

But what tipped the balance? The tenants' arguments were solid: they demonstrated that the heat supply contract included an investment component, and that the landlord had deliberately organised this system to circumvent the law. The Court considered that there was a 'fault' (within the meaning of Article 1240 of the Civil Code, which requires compensation for damage caused by one's fault).

What this means for you — concretely

If you are a landlord in Pont-l'Abbé: You must finance the major equipment (boiler, water heater, radiators) yourself. Their repayment cannot be included in the service charges. If you enter into a heat or hot water supply contract, ensure that the tariff covers only consumption and maintenance, not investment. If in doubt, ask for an audit of your contract. A bad arrangement can cost you retroactive repayments for 5 years (limitation period).

If you are a tenant in Douarnenez: Check your rent receipts. If a line mentions 'depreciation', 'installation repayment', 'financing costs' or 'investment', you can contest it. Send a registered letter to your landlord citing this judgment. If he does not respond, refer the matter to the departmental conciliation commission or the court. You can obtain repayment of the sums unduly received, plus interest.

If you are a co-owner landlord: The decision also protects co-owner landlords against abusive charges. But be careful: in co-ownership, financing charges for common parts (e.g. loan for renovation) are apportioned between co-owners, not between tenants. Do not include them in recoverable charges.

Example in figures: a landlord installs a boiler costing €10,000. He bills his tenant €200 per year in depreciation for 10 years. That is €2,000 unduly received. The tenant can claim this sum, plus interest at 5.07% (2024 legal rate).

Four tips to avoid this type of dispute

• Review your leases and receipts: Remove any mention of 'investment costs', 'depreciation', 'installation repayment' from the service charges. Only use items authorised by the decree.
• Choose a transparent heat supply contract: If you outsource heating, require the supplier to bill consumption and maintenance separately, without passing on the installation cost. Have the contract checked by a lawyer before signing.
• Keep supporting documents: Purchase invoices, maintenance contracts, consumption records. In case of a dispute, you must prove that the charges claimed are indeed recoverable charges.
• Stay informed regularly: The list of recoverable charges evolves (ALUR law, decrees). Consult a professional before modifying a lease or carrying out major works.

Further reading: related case law and developments

This decision is part of a series of judgments protecting tenants. For example, the Court of Cassation held (Civ. 3e, 21 June 2000, No. 98-16.384) that loan repayment costs for energy-saving works are not recoverable. Similarly, the costs of installing an individual water meter (Civ. 3e, 10 March 2010, No. 09-10.475) cannot be charged to the tenant.

The trend is clear: judges are targeting contractual arrangements that attempt to circumvent the limited list. Since 2005, several decisions have condemned similar practices, particularly in the context of 'energy performance' contracts or 'third-party financing'. However, note: a recent judgment (Civ. 3e, 12 January 2023, No. 21-22.456) nuanced by admitting the recovery of maintenance costs for an individual heating installation, provided that the landlord proves the amount. But the principle remains: the initial investment is borne by the owner.

For the future, the question arises for solar panels in rental properties: can the financing be passed on? The answer is probably no, unless the tenant derives a direct benefit (sale of electricity). A point to watch.

Frequently asked questions

Can I recover the cost of a new boiler from my tenant? No, it is an investment that belongs to you. You can only recover maintenance and consumption costs.

What should I do if my landlord bills me for depreciation of an installation? Send him a registered letter with a copy of this judgment. Request repayment within 15 days. If he refuses, refer the matter to the judicial court. You have 5 years to act.

Can a heat supply contract include the cost of the boiler? Yes, but only if it is a heat sale contract (subscription + consumption), without any link to the lease. The tenant must be free to choose his supplier. If the contract is imposed by the lease, the investment is prohibited.

What are the time limits for contesting? The limitation period is 5 years from the date each charge becomes due (Article 2224 of the Civil Code). For charges prior to 2015, the period was 5 years from the law of 17 June 2008.

Can I recover the financing costs of a lift? No, same principle: the lift is communal equipment. Only maintenance and electricity costs are recoverable (Decree No. 87-713).

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →